Tesla’s quarterly profit beats estimates, helped by price hikes

A Tesla logo is seen in Los Angeles, California, U.S., January 12, 2018. REUTERS/Lucy Nicholson

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July 20 (Reuters) – Tesla Inc (TSLA.O) reported stronger-than-expected quarterly profit on Wednesday as a series of price increases on its best-selling electric vehicles helped offset production problems, pushing up its shares of 4% in trade.

“With each of the Fremont and Shanghai factories hitting their peak months of production and new factory growth, we are focused on a record second half of 2022,” Tesla said in a statement.

Tesla said it converted about 75% of its bitcoin purchases into fiat currency, adding $936 million in cash to its balance sheet.

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The electric-vehicle maker posted adjusted earnings of $2.27 per share, down from analysts’ consensus estimate of $1.81.

Its automotive gross margin fell to 27.9%, down from both a year earlier and the previous quarter, amid inflationary pressure.

The company has raised the prices of its cars several times this year to cope with higher costs for lithium used in batteries and aluminum used for bodywork, as well as other raw materials.

CEO Elon Musk, however, said Tesla would lower prices when inflation cools.

Total revenue fell to $16.93 billion in the second quarter from $18.76 billion a quarter earlier, ending its streak of record revenue in recent quarters when it had struggled to meet demand for its electric cars due to the closure of its Shanghai plant and production issues at new plants.

Analysts had expected revenue of $17.10 billion, according to IBES data from Refinitiv.

Tesla is bracing for a potential recession and growing competition from rivals. It also faces the challenges of significantly ramping up production in the second half, after lockdowns in China hit production at the company and its suppliers. Read more

Musk also said Tesla’s new factories in Texas and Berlin are struggling to ramp up production, calling them “gigantic money furnaces” that are losing billions of dollars.

Musk said he had “a very bad feeling about the economy” in June and began laying off staff. Read more

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Reporting by Hyunjoo Jin in San Francisco and Nivedita Balu in Bengaluru Editing by Anil D’Silva, Peter Henderson and Matthew Lewis

Our standards: The Thomson Reuters Trust Principles.

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